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Facebook, Inc. v. Power Ventures, Inc.

United States Court of Appeals for the Ninth Circuit

December 9, 2015, Argued and Submitted, San Francisco, California; December 9, 2016, Amended

No. 13-17102, No. 13-17154

Opinion

 [*1062]  AMENDED OPINION

GRABER, Circuit Judge:

One social networking company, Facebook, Inc., has sued another, Power Ventures, Inc., over a promotional campaign. Power accessed Facebook users' data and initiated form e-mails and other electronic messages promoting its website. Initially, Power had implied permission from Facebook. But Facebook sent Power a cease and desist letter and blocked Power's IP address; nevertheless Power continued its campaign. Facebook alleges that Power's actions violated the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 ("CAN-SPAM"), the Computer Fraud and Abuse Act of 1986 ("CFAA"), and California Penal Code section 502. We hold that Power did not violate the CAN-SPAM Act because the transmitted messages were not materially misleading. We also hold [**4]  that Power violated the CFAA and California Penal Code section 502 only after it received Facebook's cease and desist letter and nonetheless continued to access Facebook's computers without permission. Accordingly, we affirm in part, reverse in part, and remand to the district court.

BACKGROUND

Defendant Power Ventures, a corporation founded and directed by CEO Steven Vachani, who also is a defendant here, operated a social networking website, Power.com. The concept was simple. Individuals who already used other social networking websites could log on to Power.com and create an account. Power.com would then aggregate the user's social networking information. The individual, a "Power user," could see all contacts from many social networking sites on a single page. The Power user thus could keep track of a variety of social networking friends through a single program and could click through the central Power website to individual social networking sites. By 2008, the website had attracted a growing following.

Plaintiff Facebook also operates a social networking website, Facebook.com. Facebook users, who numbered more than 130 million during Power's promotional campaign, can create a personal profile—a web page within the [**5]  site—and can connect with other users. Facebook requires each user to register before accessing the website and requires that each user assent to its  [*1063]  terms of use. Once registered, a Facebook user can create and customize her profile by adding personal information, photographs, or other content. A user can establish connections with other Facebook users by "friending" them; the connected users are thus called "friends."

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844 F.3d 1058 *; 2016 U.S. App. LEXIS 21944 **

FACEBOOK, INC., a Delaware corporation, Plaintiff-Appellee, v. POWER VENTURES, INC., DBA Power.com, a California corporation; POWER VENTURES, INC., a Cayman Island corporation, Defendants, and STEVEN SURAJ VACHANI, an individual, Defendant-Appellant.FACEBOOK, INC., a Delaware corporation, Plaintiff-Appellee, v. POWER VENTURES, INC., DBA Power.com, a California corporation, Defendant, and POWER VENTURES, INC., a Cayman Island corporation; and Steven Suraj Vachani, an individual, Defendants Appellants.

Subsequent History: Motion granted by, in part, Motion denied by, Without prejudice, in part Facebook, Inc. v. Power Ventures, Inc., 2017 U.S. Dist. LEXIS 65314 (N.D. Cal., Apr. 28, 2017)

Injunction granted at, Stay denied by, Sanctions allowed by, Judgment entered by Facebook, Inc. v. Power Ventures, Inc., 252 F. Supp. 3d 765, 2017 U.S. Dist. LEXIS 66948 (N.D. Cal., May 2, 2017)

Motion granted by, in part, Motion denied by, in part Facebook, Inc. v. Power Ventures, Inc., 2017 U.S. Dist. LEXIS 125520 (N.D. Cal., Aug. 8, 2017)

Motion granted by Facebook, Inc. v. Power Ventures, Inc., 2017 U.S. Dist. LEXIS 125529 (N.D. Cal., Aug. 8, 2017)

Motion granted by, Sanctions allowed by, Costs and fees proceeding at Facebook, Inc. v. Power Ventures, Inc., 2017 U.S. Dist. LEXIS 125541 (N.D. Cal., Aug. 8, 2017)

US Supreme Court certiorari denied by Power Ventures, Inc. v. Facebook, Inc., 138 S. Ct. 313, 199 L. Ed. 2d 206, 2017 U.S. LEXIS 6087 (U.S., Oct. 10, 2017)

Decision reached on appeal by Facebook, Inc. v. Power Ventures, Inc., 2019 U.S. App. LEXIS 1749 (9th Cir. Cal., Jan. 18, 2019)

Prior History:  [**1] Appeals from the United States District Court for the Northern District of California. D.C. No. 5:08-cv-05780-LHK, D.C. No. 5:08-cv-05780-LHK. Lucy H. Koh, District Judge, Presiding.

Facebook, Inc. v. Power Ventures, Inc., 828 F.3d 1068, 2016 U.S. App. LEXIS 12781 (9th Cir. Cal., July 12, 2016)Facebook, Inc. v. Power Ventures, Inc., 2013 U.S. Dist. LEXIS 137890 (N.D. Cal., Sept. 25, 2013)Facebook, Inc. v. Power Ventures, Inc., 2013 U.S. Dist. LEXIS 111504 (N.D. Cal., Aug. 7, 2013)Facebook, Inc. v. Power Ventures, Inc., 844 F. Supp. 2d 1025, 2012 U.S. Dist. LEXIS 25062 (N.D. Cal., Feb. 16, 2012)

CORE TERMS

users, message, authorization, permission, e-mails, website, accessed, initiated, misleading, cease and desist, terms, promotion, district court, networking, friends, block, recipient, campaign, header, site, CAN-SPAM Act, electronic, external, discovery sanction, damages, deposit, invited, clicking, Connect, revoked

Civil Procedure, Appeals, Standards of Review, De Novo Review, Summary Judgment Review, Standards of Review, Computer & Internet Law, Internet Business, Internet & Online Services, Service Providers, Business & Corporate Compliance, Civil Actions, Computer & Internet Law, Civil Actions, Criminal Offenses, Computer Fraud & Abuse Act, Damages, Data Crimes & Fraud, Business & Corporate Law, Corporate Governance, Directors & Officers, Management Duties & Liabilities, Abuse of Discretion, Discovery & Disclosure, Disclosure, Sanctions